Get Free AAG DVD and Brochure

5 Tax Tips for Retirees

Unless you’re an accountant, it’s never fun to do your taxes. As we approach April 15th, it’s critical that you have your finances in order. As we age, it’s important to note that certain aspects of paying taxes will shift. To avoid an audit and maximize your returns in your retirement years, consider these five tips.

Diversify Retirement Income

Try to diversify your income sources whenever possible. If you draw from your taxable and non-taxable income it keeps your taxable income margin low. Investigate options like Medicare, part-time work, or social security.

Transition Funds from a 401K to a Roth IRA

You’ll pay higher taxes the year you convert the funds, but you might be able to reduce future tax liabilities. Calculate total taxes based on life expectancy and if you can minimize taxes via a Roth IRA, consider making the switch.

Avoid Do-It-Yourself Tax Programs

Consider working with a retirement tax specialist or niche accountant to make sure you’re getting the highest returns each year. Online software can be tricky – especially for seniors. If you’ve retired in the past year, or experienced any significant lifestyle changes such as selling your home, your taxes might be more than you can handle as an individual. Turn to the experts to avoid misrepresenting your financial situation.

Take the Minimum Distributions Required

When you hit 70 1/2, you need to take care of required minimum distributions each year. If you fail to take the distributions, or if they’re too small, you may have to pay a 50% excise tax on the amount not distributed as required. Consult with an expert to ensure that you’re following the rules and taking the payouts as necessary.

Consider Reverse Mortgages as an Income Source

If you’re looking for additional income, a reverse mortgage can be a good option for some retirees. The loan proceeds are not considered income and therefore do not have to be reported as annual income.  This makes the reverse mortgage a more attractive option than early withdrawals from a retirement account – which carry penalties and tax implications.


There are some pretty significant life changes between middle age and retirement. You might downsize your home, rack up expensive medical bills, or finally dip into savings to pay for a lavish travel adventure. Regardless of your circumstances, take these five tips into account to reduce tax liabilities and maximize your returns this year.

Diversify Retirement Income Transition Funds from a 401K to a Roth IRA Avoid Do-It-Yourself Tax Programs Take the Minimum Distributions Required Consider Reverse Mortgages as an Income Source Conclusion American Advisors Group